Two national credit ratings agencies affirmed King County’s solid credit ratings ahead of a planned sale of two series of bonds totaling approximately $150 million that will support vital sewer improvement projects to protect public health, the environment, and support economic growth.
King County maintains strong credit ratings ahead of bond sale for clean-water projects
Favorable interest rates lower the cost to fund vital infrastructure improvements
Two national credit ratings agencies affirmed King County's solid credit ratings ahead of a planned sale of two series of bonds totaling approximately $150 million that will support vital sewer improvement projects to protect public health, the environment, and support economic growth.
"At a time when the debt of even the federal government is downgraded, these blue-chip ratings reaffirm our responsible management and fiscal oversight of County government," said King County Executive Dow Constantine. "By selling bonds at low interest rates, we can keep costs down for ratepayers while building critical clean-water facilities that create jobs and put people back to work."
One series of bonds will be backed solely by sewer revenues and are rated "AA+" and "Aa2" by Standard & Poor's and Moody's Investors Service respectively. The other series are Limited Tax General Obligation (LTGO) bonds that are backed by both sewer revenues and the full faith and credit of the county, and are rated even more highly at "AAA" and "Aa1".
The bonds will go to market on March 26 and be used to refinance a portion of outstanding Wastewater Treatment Division (WTD) debt and fund the clean-water utility's ongoing capital improvement program.
In its report, Moody's assigned an "Aa1" rating and stable outlook to the county's LTGO refunding bonds. The agency said that the regional economy "has passed the worst of the recession" and that "county [financial] reserves are improving." Moody's also cited the clean-water utility's stable rate base in the rationale for its decision.
For its part, Standard & Poor's assigned an "AAA" rating and stable outlook for the LTGO refunding bonds, noting the county's strong budgeting and financial monitoring framework. The agency also mentioned the county's consistent financial performance and maintenance of strong cash reserves.
Higher credit ratings allow King County to borrow money for projects at lower interest rates. The reaffirmed ratings mean that King County will be able to achieve an interest rate on the new bonds of at least .25 percent less than other comparable government borrowers with a credit rating that is one step lower, and a rate that is .80 percent less for the same borrowers with a credit rating that is two steps lower than King County's. This level of interest rate savings will result in a projected savings of $10 million to $25 million over the life of the bonds.
The bond proceeds will go toward projects such as rehabilitating aging treatment facilities so they continue to operate reliably and adding new capacity to serve regional population growth. These projects also boost the regional economy by providing good-paying jobs while continuing the clean-water utility's record of protecting the environment and public health.